Rust, Rot, Depreciate

Starting with point #7 from last week‘s entry of setting oneself up for financially healthy ranching or business.

Reduce overheads! Stan Parsons said you only need a hammer and a wheelbarrow to be a financially successful rancher, and the wheelbarrow was questionable. Now, i might be paraphrasing, but his point is clear; that which rusts, rots, and depreciates is not an asset and likely adds labor and other unnecessary costs. Machinery, buildings, vehicles, even a stack of hay!

Nearly every ranch or farm has a massive amount of iron and steel piled around the farm or taking up space in a barn or shed of questionable value. Both the barn and the machinery must be pulled under scrutiny. Some farms may even have extra homes, though often the old homes and ancient barns may not even be worth tearing down, but the satisfaction of cleaning up a place may provide the incentive. However, there is also the issue of liability and, even the threat to health of livestock to leave such structures in place. Livestock has no need of buildings or machinery.

Approach each piece of machinery, barn, shed, house, corral, etc with a very critical eye. Be careful you aren’t fixing machinery and buildings you don’t even need! Additionally, consider whether or not you are making an overhead expense as a monument to tax evasion. If you purchase fence supplies, fuel, machinery, etc to offset income every year, what advantage is there except needing more room for storage and increasing chances of obsolescence and decay. Is it important to hoard fence supplies when you really don’t need to build fence? Even in our remote area with few people to do work, we can hire a fencing crew.

1. When was the last time i used this machine and why did i use it?
2. Do i have time to run this machine?
3. Does it have a purpose right now, this very moment in time which will add harmony to my life?
4. Does it have more value to someone else – in other words – before it is obsolete, would the kinder thing be to sell it to a younger person to give him an opportunity to purchase a needed piece at a discounted (used) price?
5. A shed or building may have value to someone else – either as selling it and moving it off your property (ideal) or if it’s in good condition and easily accessible maybe repurposed from storing your machinery you don’t need to leasing out the space. Remember though that maintenance expenses, depreciation, damage will still fall on you.
6. If a building is needed for necessities, be sure to update it so that it is easily used by all who need to. Consider overhead doors or smaller ‘people’ doors. Eliminating heavy sliding doors will save on health issues.
7. Corrals – good ones are a necessity on any ranch. There may be too many expensive systems scattered at various small parcels – Why? If the money has already been spent it becomes more difficult to decide the path forward. Should more money be spent to tear it out and sell the parts? or just leave it and use it once a year?

In some cases, the time to make the decision whether or not to spend wads of cash comes BEFORE the money is blown. This is most assuredly the case with more permanent type structures such as corrals and buildings.

I’m going to go so far as to say, the many farms, ranches, and businesses, could have ‘estate’ sales to generate 100s of thousands of dollars to reinvest and actually free up valuable time and be more profitable. In fact, you may have other valuable assets which need selling before they become liabilities or worthless. Harvesting mature trees comes to mind. Take inventory of your farm, ranch, and business. Decide what is not needed to keep it moving forward so it’s more rewarding – perhaps the next generation will be more interested in continuing the legacy you built with literal blood, sweat, and tears.

All the points i will be covering are so intertwined, it’s difficult to pull out each one as a standalone. Case in point is the example of excess corrals. Before spending 10s of thousands of dollars on multiple corrals, the better direction is likely to combine herds and build one good corral. If a small catch area is needed at another location, perhaps a mobile unit would be helpful. But better yet, the satellite location can likely be leased out or sold off.

The bottom line:

Sell off all unused machinery, buildings, vehicles, tools, etc   All these are liabilities and cause a lot of wasted time and expense in maintenance (labor and supplies), insurance, and depreciation.  Hoarding is not a good trait – help someone get started by selling off unused assets before they are obsolete.

Shabbat Shalom!

Create Something Beautiful Everyday!

Incredibly, this is an actual race (alleyway) that we still use. It is very dangerous with broken boards on each side which are sharp, jagged, but wired back into place. The remaining boards are just waiting to bust with a minimum amount of animal pressure. A few years ago, whilst quickly sliding a bar in behind an animal just at that crowding area, my finger was smashed against a bolt sticking out. Didn’t quite cut to the bone. It’s ridiculous, IMHO, to spend 10s of thousands of dollars on new seldom used corrals, when the main ones are badly neglected, yet are used quite often. Gates should swing and easily latch, proper sized race for type of cattle, butt stops, sharp edges, blind spots addressed, etc. Installing good equipment that can be used that will be far less than even one trip to the emergency room. Alleyways or races should be appropriately sized for the stock and have a back up gate. From experience, i’m so tired of bringing one calf at a time only to have the bloke manning the butt bar at the chute to miss and the calf barrels back into me, then having to crowd the calf back up to the headgate.

Piles of materials taking up valuable space and rusting down this past year. I’ve even toured farms and came upon a huge pile of brand new steel posts and multiple rolls of barbed wire completely engulfed by years of mature grasses and tree sprouts in the middle of the pasture! Not in good shape after 30 years or more. Count the cost BEFORE buying stuff to put into storage. The cost should include whether or not you have time or any help to get the job done. FIRST – do i really need this?

Building a corral with new materials, but in the wrong spot or in the same footprint which didn’t work before is a waste of time and money for decades. If the flow of stock didn’t work in the old layout, it won’t work even with new materials.

The ‘Simple’ Life?

There seems to be a resurgence of retirees wanting to get back to a ‘simple’ life of growing their own garden and/or raising their own animals for food, milk, and/or fiber.  Interestingly, it also seems to attract the young set as well with high hopes of being self-sufficient on the land.  Nothing wrong with those ideals, but our American culture and requirements are different than what they were 100 or even 50-60 years ago.  Many of our expenses are out of our control (health insurance, liability insurance, our reliance on electricity, phones, internet, medical expenses are out of sight, vehicles, petrol, etc, etc), so the ‘farm’ whether it is a hobby size or much larger needs to not only cover these expenses, but operating expenses as well.  In other words, one must turn a profit to be sustainable.  Don’t forget that ‘simple’ certainly does not mean easy.

I’ve blogged on this before, but one thing that is a killer to many striking out in an agrarian lifestyle is to get FAR TOO MANY irons in the fire.  Focus on what you like to do and that which will also turn a profit quickly.  After you become financially successful as to being out of debt and putting away a bit of savings, find other ‘holons‘ which will complement or add value to the core activity.  Don’t be distracted by get-rich schemes – they do not exist in agriculture.  If you have a town job – hang on to it until the farm is a going concern.  Doing both is hard – no doubt – but staying out of debt is tantamount to being successful.

This type of operation is typically termed ‘holistically managed’ and there are resources to help you determine a course of action.  Our first introduction to this type of thinking was through Holistic Management Resources now known as HMI, Holistic Management International.  This link will take you directly to some free downloadable planning tools and and teaching materials.  Allan Savory and his wife, Jody Butterfield, started HMI, but have now moved on to start a new organisation called Savory Institute.  The Savory Institute website has numerous videos and papers for your perusal.

Considerations:

Marketing – where will you sell your product?

Equipment – how much will the initial investment be?  How often will it be used? Does it have multiple uses?  How can you make money with what you already own?  If there is equipment you don’t use, consider selling it.

Time – when will the cash start flowing back to you?

Weather – Ag enterprises look so easy on paper, but consider that you have no control over the weather and inclement extremes can bring diseases in both plants and animals as well as drought and flooding, damaging hail can destroy thousands of acres of crops in just minutes.  Be prepared, both financially and mentally, for complete failures and steep market price declines.

Government – you also have no control over government policies as it picks winners and losers.

Don’t spread yourself out to a lot of enterprises – especially those that are not related – you’ll be exhausted all the time and seldom see a financial reward.  Also try to purchase multi-purpose equipment.

Learn from others’ failures, mistakes, and accomplishments.  Your situation may be different, but there is no use setting up the same hurdles others have taken down.  Some practices simply DO NOT WORK in some or all locales and situations.

Hindsight, of course, is much clearer as to making business decisions, but there are basic principles to be followed.

What is your dream job/career/life?  And how are you moving towards it?  Have you already experienced your dream job and found it wanting?  Why?

Lambing out of season! Bad, bad mistakes.

Chopping ice in the winter is oftentimes a necessary job.

Unfortunately, livestock dies, in this case just an accident. Found her dead. So discouraging……!

Rappelled down a 25 foot bank to this calf, then laid out flat across the mud to reach it with a log chain which i wrapped around its neck. Chain wasn’t long enough to reach back up to my Gator, but thankfully, I had this 30 foot horse lunge line with me. Pulled the calf up and out. It survived and was sold here a couple weeks ago!